Dubai says new oilfield could begin production in a year

Dubai said on Friday that a new offshore oilfield, discovered at a time when the Gulf emirate is under unprecedented financial pressure, could begin production next year.

The cash-strapped government announced the discovery on Thursday, but has so far given no details about the size of the find.

The new field should "notably increase the production of crude in Dubai, whose current oil reserves are about 4 billion barrels," an official statement said on Friday.

Preliminary results "indicate that commercial production can begin in one year," it added.

The oilfield, named Al-Jalila after a daughter of Dubai ruler Sheikh Mohammad bin Rashed al-Maktoum, could help the emirate boost electricity output, the statement said.

"This important discovery will provide an impetus to the various sectors of the economy of Dubai, more so because the emirate intends to increase its output of electricity to 10,000 megawatts in 2012, against 7,500 megawatts at present," the statement said.

Dubai says that the new field is east of the small Rashid field, which is some 70 kilometres (44 miles) off the coast.

Dubai discovered oil in commercial quantities in 1966 at the offshore Fateh field, and began exporting in 1969.

The city-state's oil production reportedly peaked in 1991 at 410,000 barrels per day and has declined steadily since, dropping to 170,000 bpd in 2000. Current official figures are not available.

Sheikh Mohammed, who is also the UAE vice president and prime minister, hoped the discovery would "give a strong boost to all sectors of the local economy and provide a new source of revenue that could strengthen the drive for comprehensive development in Dubai," the statement said.

Dubai's economy boomed in recent years on non-oil sectors, particularly property and construction, which attracted huge investments, in addition to a prospering tourism industry.

But the rapid economic growth came to a grinding halt after the global financial crisis hit Dubai in autumn 2008, drying up foreign financing that was vital for the overheated real estate sector.

Dubai had borrowed heavily to build its economy, splashing out on grandiose projects including man-made palm tree-shaped islands. It now faces severe problems in meeting its debt obligations